Rush to ad-blocking software concerns web advertisers

By ALAN J. ORTBALS Online advertising has been on a roll for years but it’s beginning to run into some strong headwinds, according to PageFair, a web-based company that proclaims a mission of sustaining the open web. In 2013, Internet advertising revenues in the United States totaled $42.8 billion, a 17 percent increase over the $36.57 billion in revenues in 2012. But now, according to PageFair, ad blocking has become the most hotly discussed topic in the digital media industry. Software that blocks web advertising is growing quickly. According to a recent report by PageFair: • At least 419 million people (22 percent of the world’s 1.9 billion smartphone users) are blocking ads on the mobile web. • Both mobile web and in-app ads can now be blocked. • As of March 2016 an estimated 408 million people are actively using mobile ad-blocking browsers (i.e., a mobile browser that blocks ads by default). • As of March 2016 there are 159 million users of mobile ad-blocking browsers in China, 122 million in India, and 38 million in Indonesia. • As of March 2016 in Europe and North America there were 14 million monthly active users of mobile ad-blocking browsers. • A further 4.9 million content blocking and ad-blocking apps were downloaded from the app stores in Europe and North America since September 2014. There are ad-block extensions for every major browser that will detect and remove ads from websites. Some of the more popular ones are AdBlock, Adblock Plus and uBlock. “The statistics pretty much show that it is catching on,” said Ed Hershberger, associate professor and chairman of management and marketing department of the SIUE School of Business “It’s a really serious concern in the advertising industry for obvious reasons. Websites that sell their advertising space do so in order to raise money to run the website. We don’t pay to visit websites directly. We pay to visit websites by viewing ads. If it’s easy to block those ads, then we’re essentially not paying for these websites and they’ll start to go away.” Ever since VCRs came on the scene, people have been fast forwarding through the commercials when watching recorded programs, Hershberger said. With online advertising, it’s even easier to skip the ads because, once you’ve set up ad-blocking software, you’re done. Now web page designers are designing websites in such a way that the web server can recognize when the user is running web blocker software, Hershberger said. “If the user doesn’t accept the page request for that ad, it puts in what is called an “inter-stitial webpage” in between pages that says, ‘we see that you’re using ad-blocking software; viewing our ad is what helps us operate; disable your ad-blocking software for us so that we can continue to give you the content you want.’” Hershberger said that some sites are going further and actually restricting access to the website if you don’t have the ad-blocking software disabled. However, he added, those kinds of responses are much more the exception than the rule right now. While some users might be put off by this kind of response to their use of ad-blocking software, Hershberger says it’s an important message to get across. “I think it helps to reinforce the idea that the media and the advertisers rely on one another, Hershberger said. “Companies like the New York Times aren’t putting this stuff out there just for the heck of it or just because they’re nice guys. They’re doing it to make money and they make money by viewing ads. I think that advertisers and the media need to reinforce that idea and remind people that this is what pays for the content. You’re never going to convince everybody that this is a worthwhile thing, or that they should at least be OK with being exposed to advertising if they want this content, but I think the more you reinforce that idea, the more people will be OK with it.” Television is struggling with similar behavior. With the prevalence and ease of use of DVRs, some people rarely watch programming live, record everything and zip through the commercials when they sit down to watch their programs. Hershberger said that this behavior has caused the ad industry to change the way they rate and price TV advertising. They can now differentiate between TV that is watched live and TV that’s watched recorded. “If a television show has a huge live audience, it’s much more valuable to advertisers because viewers can’t skip the ads,” Hershberger said. “So, things like sporting events are becoming more and more valuable, because they have a much higher rate of live viewing.” Hershberger said that users and providers play a game of cat and mouse with web advertising, another problem with internet advertising is it’s very easy to sort of fake the data. “There have been scandals in the past where companies have programmed a robot that would do a page request for an ad over and over and over again, for the purpose of generating revenue because the pricing model on online advertising is either pay per view or pay per click,” Hershberger said. “If it’s a pay per view model, every time that ad gets served to someone’s browser the advertiser has to pay a nickel or a penny or something like that. Or, if it’s a pay per click plan, every time the ad gets clicked on the advertiser has to pay a higher amount because a click is more valuable than just a view. So, if you’ve got a robot out there that can just constantly click on these ads and every time it generates a penny for the website, well you’re going to make a lot of money that way for fake advertising views. There’s a real big issue with transparency of online ad buying.” Hershberger said that, like hackers and web security providers, web designers and ad-block software developers will continue a back and forth game. “I think of the ad blockers as kind of like viruses, meaning that the ad blocking software will always evolve to block more and more ads,” Hershberger said. “And the people placing the ads will always be finding unique ways to not be caught by the ad blockers. The advertisers will adjust.”